Solana ranks second in DEX volume - Does SOL price follow?

The native SOL Token of Solana has fallen 15% since it was unable to reclaim the $168 level on June 12th. This volatility comes after network activity decreased and demand for memecoin weakened.

However, recently, Solana (SOL) has reclaimed the second position in trading volume on decentralized exchanges (DEX), raising the question of whether it can regain the level of $180 in the near future?

DEX Trading Volume Share | Source: DefiLlamaAccording to data from DefiLlama, DEX activity on Solana reached 64.1 billion USD in 30 days, surpassing Ethereum's 61.4 billion USD. While BNB Chain still holds the top position with 159.6 billion USD during the same period, Solana has gained market share throughout June.

The main platforms contributing to this growth include Raydium, with a volume of 19.1 billion USD, followed by Pump.fun with 14.2 billion USD and Orca with 13.9 billion USD. However, overall DEX activity on Solana is still 91% lower than in January.

The 15-day performance of Solana memecoin | Source: TradingViewThe appeal of the memecoin sector continues to decline, with most tokens losing over 25% of their value in the past 16 days.

Giga vaporized 42%, Popcat fell 35%, Fartcoin and PNUT both plummeted 31%, while Bonk and WIF lost 25%. This weakness has led investors to pay less attention to the fact that Solana's DEX market share is increasing.

In addition, Hyperliquid is also emerging as the dominant blockchain for perpetual contract trading. This shift has reduced interest in both Ethereum layer-2 and independent decentralized applications (DApp) on Solana as well as BNB Chain.

30-day activity of perpetual contract, USD | Source: DefiLlamaAccording to DefiLlama, the 30-day trading volume of Hyperliquid is 84% higher than the total volume of its 5 largest competitors.

More importantly, the success of Hyperliquid has fueled speculation that other projects may launch their own independent blockchains, such as major DApps based on Solana like Pump.fun.

This fear has weakened traders' confidence that Solana can become a dominant player. The loss of confidence is evident in the derivatives market, where the demand for leveraged Long positions has decreased.

The annual funding rate for SOL perpetual contracts | Source: Laevitas.chIn a neutral market, perpetual futures typically have an annual funding rate of 5% to 12% for Long positions. When this rate turns negative, it signals bearish sentiment as short traders are paying to maintain their trades. Over the past 30 days, derivative data has not shown prolonged optimism for SOL.

The biggest potential catalyst for SOL remains the approval of the Solana ETF by the U.S. Securities and Exchange Commission (SEC), with a decision expected in October. Until then, the bulls are looking to the technical strength of the network to support a price recovery.

Davo from Drift Protocol notes that the robust base layer of Solana supports "asset availability," meaning tokens can be used as collateral.

He also emphasized the lack of "off-chain matching tools", which helps protect DEX users from transaction rearrangement or prioritization.

Although primarily related to memecoins and token launches, the Solana ecosystem still has many other use cases. While Hyperliquid may be an exception, emerging blockchains like Berachain have not attracted too much capital.

Considering Solana's low fees and scalability, the price could return to the $180 mark even before the ETF decision in October.

Vincent